Dealing with late payment can be tricky for small and medium sized businesses. Handle it wrong and a customer could be lost, ignore the issue and it can stifle business growth, have a huge impact on cash flow and even cause a company to go bust.
Staggering figures published in a government paper, revealed that small businesses spend around 130 hours a year chasing late payments, equating to an average cost of £1,500 per business.
The problem is endemic with two thirds of SMEs suffering according to research by the IOD, but follow this 12-Step plan and you’ll be able to minimise the damage late payment causes your business.
The single biggest cause of small business failure in the UK is poor cash flow management, most often brought on by late payment issues. It’s therefore vitally important that you do all you can to ensure that your customers pay you on time.
Here are 7 things a small or start-up business (or any organisation for that matter) can do to ensure that late payment issues do not threaten the viability of their operation:
Credit limit application forms are a useful way of finding out the financial capabilities of a new client or customer, before you agree to provide them with any form of credit.
A recent survey has found that small businesses spend an average 130 hours each year chasing late payments, and wait 30 days beyond the contractually agreed terms before payment is actually received.